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Nasdaq has abandoned its anticipated crypto custody service, a move prompted by the ever-evolving US regulatory climate, according to the firm’s CEO, Adena Friedman.
This strategic decision, which marks a significant setback in the institutional adoption of cryptocurrencies in the US, was revealed in an earnings call on Wednesday:
“This quarter, given the changing business and regulatory environment in the United States, we have made the decision to suspend our start-up of the US digital asset custodian business and our related efforts to pursue the relevant license.”
Nasdaq had expressed intentions to launch a crypto custodial service, a commitment highlighted by a push for regulatory approval and building the necessary infrastructure. The firm had even sought to obtain a limited purpose trust company license from the New York Department of Financial Services (NYDFS) to manage the custody business.
However, in the face of an uncertain regulatory environment and increased scrutiny of crypto-related services, Nasdaq has chosen to rethink its involvement in this sphere.
This change could set a worrisome precedent for the digital asset industry, sparking concerns about a possible migration of crypto firms to jurisdictions more favorable to their operations.
So Nasdaq, an entity that has dealt with every type of regulation imaginable, doesn’t think it can safely get the regulatory clarity to run a *CUSTODY* service in the US.
This shows you what a joke US regulatory clarity has been and what a chilling effect it has had. https://t.co/8JigtlcTr7
— Adam Cochran (adamscochran.eth) (@adamscochran) July 19, 2023
Despite this sudden retreat, Nasdaq’s support for the digital asset sector isn’t disappearing entirely. Friedman stated that the firm will continue to support the industry, noting intentions to seek partnerships with potential ETF issuers:
“We continue to build and deliver technology capabilities that position Nasdaq as a leading provider of digital asset software solutions to the broader global industry.”